Vendor finance offer on rural property?

Vendor finance in rural areas is very common

Hi Mazza

As Darryl says, vendor financing (VF) of rural properties never lost its popularity with rural communities.  Unlike residential areas, were banks jumped into the market in the 80's and VF is only slowly increasing in popularity again.

If I were in your shoes, I'd be talking directly with the seller.  As you say, after such a long time on the market s/he's probably keen to get 'something' going.  For starters how about offering to buy the property with a vendor finance Instalment Contract (sometimes called a Terms Contract).  Possibly offer a $50K deposit and payments over 20 or 30 years.  You may not get that long but it's worth trying to get as long as you can.

Let us know what State you're in and we can direct you to a vendor finance savvy solicitor to draw up the Instalment Contract.

Also, because it's a rural property it should not be regulated by the National Credit Code.  As necessary, this could allow you to offer a 5 year Instalment Contract with a balloon payment at the end of the term for the remainder of the balance owing.

This is a very flexible way to buy this type of property and just about anything you and the Seller agree to should be able to be included in the Contract.

Regarding the development application, I'd show the current seller that the earlier I get the DA approved, the earlier s/he will get paid out.  You could even offer a financial inducement to the seller when the DA is approved.

Good luck and welcome to the forum.

Cheers,  Paul

You could also throw an options strategy in there blended with the VF vehicle. 

You buy and option (but not an obligation) to purchase the property at a later date at above his asking price. You do the DA prep work. Once you're happy it's a goer and you perhaps have buyers lined up you execute the option.

He gets a few bob for the option, say an extra 5k on price and an income off the VF component until you've sold the lot.

You get to secure it now for bugger all 1-2k maybe and reduce your risk (time to watch the market, get the DA ready to roll and confirmed its a goer, and with a bit of luck you have time to do a bit of marketing to prospective buyers) You take your 100acre block and pay for that while he VF's the rest until sold. 

You get much lower financing pressures, profit into offset accounts and you might just sell your other IP over this time frame.

All going well you've got 100 acres for bugger all and a pocket full of cash (less tax of course)

If the vendor is desperate to sell then I'd certainly try and find out what he paid for it and when (as others here have suggested).  Then open a dialog with him and see what can be negotiated.  Maybe VF is a realistic option in this instance, and if you can negotiate the terms then more's the power.  Good luck, I'll be interested to know what transpires!